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. Last Updated: 07/27/2016

RusAl Plans $7Bln Plant Near Volga

United Company RusAl said Tuesday that it planned to build the world's largest aluminum smelter near the Volga River and to finance the expansion of a nuclear power station to secure energy for the 1.05-million-ton plant.

RusAl said it had signed an agreement with the Saratov regional government to build two reactor blocks at the nuclear plant to generate 2,000 megawatts for supply to the new smelter.

Investments of $6 billion to $7 billion would be required, analysts and a company spokeswoman said. RusAl said the budget for the project would be determined by a feasibility study due for completion by the end of next year.

"It will require large capital expenditure at the beginning, but it's a cheaper in the long run than other forms of energy," Alfa Bank metals analyst Valentina Bogomolova said.

RusAl has been examining nuclear fuel as a potential new power source for metal production through a joint venture with the Federal Atomic Energy Agency, although the latest deal is separate from this. The company said it would build the new reactor blocks at the Balakovsky nuclear power plant. The plant is one of the country's most modern nuclear power stations.

"It will enable our company to strengthen its power base through the construction of one of the most environmentally friendly energy sources, as well as growing aluminum production by over 25 percent," chief executive Alexander Bulygin said.